Shop Talk

Retailers, consumers and prices

Latest back-to-school outlook brings little cheer

August 10, 2009

handCitigroup retail analysts held a call with the media to discuss their outlook for this year’s back-to-school season and, as we’ve been hearing, there are few bright spots on the horizon.

Deborah Weinswig, who covers retailers including Costco, Wal-Mart and Nordstrom, said Citi expects back-to-school same-store sales for those retailers to fall 3 percent to 4 percent.

That compares with a gain of 0.9 percent last year.

“This is the first year since at least 1995 that we are projecting a decline in back to school same store sales,” she said. “In addition, if back-to-school sales don’t materialize early we believe that retailers could become very promotional in an attempt to drive traffic and sales.”

She said Citi’s proprietary back-to-school survey found that 45 percent of consumers plan to spend less for this year’s new school season than they did a year ago. The survey found that most consumers plan to buy apparel (75% vs. 79% last year), while the second most common purchase is expected to be a personal computer (15% vs. 19% last year) –although, as you can see, the percent planning to buy in both categories is down year-over-year.

J.C. Penney is one of Weinswig’s top picks for back to school – helped mainly by the fact that they have very easy comparisons to a year ago when sales fell.

Kimberly Greenberger, another analyst, said she is cautiously optimistic for improving sales and profit trends for the back to school season for softline retailers, or chains like Aeropostale and Pacific Sunwear. Greenberger said she was bullish on the outlook for American Eagle Outfitters and Urban Outfitters.

She said Urban Outfitters is a best-in-class retailer, while American Eagle Outfitters is showing improved product execution and faces easier sales and margin comparisons.

(Photo: Reuters)

Comments

I am planning on saving money this year by reducing spending on clothing, stationery is a small aspect but I suppose I won’t spend more than I have to. But I have to live up to the promises that I made like if my son did well I would buy him a cell phone which he did so I need to keep up my end. He has agreed that in this economy I can’t give him an expensive smartphone so he has chosen a Motorola W376 from Tracfone. It is less than $30 and comes with DMFL, games, camera and FM radio and web aces so he’s really happy and I’m not breaking the bank which is great.

Posted by Penny | Report as abusive
 

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